The transition to illiberalism
The rapid decline in civil society space around the world, highlighted in the Foreword, is part of a bigger trend of geopolitical transition involving democratic recession and authoritarian resurgence. In this ‘Age of Impunity’, there is a clear shift in the balance of power between liberal democracies formally committed to the rights and autonomy of individuals, and autocratic regimes that are not. Almost one-third of the world’s population now lives in countries going through a ‘third wave of autocratization’. The weakening of international institutions and democratic norms worldwide has resulted in fewer constraints on autocracies. The rise of nationalism, populism and illiberalism, including in countries with a long track record of upholding basic civic freedoms, is taking its toll on civil liberties. The reports of CIVICUS Monitor, which tracks and rates the overall civic space of each country around the world, show not only the degree of backsliding in civic space in the last few years, but also the speed at which this decline has occurred. In 2019, 40 per cent of the world’s population lived in repressed countries – in 2018, that figure was 19 per cent.
In parallel, there is increasing pressure and expectation on corporations to tackle growing economic inequality, lack of diversity and inclusivity, and the erosion of democracy and the rule of law. The COVID-19 pandemic, in exacerbating inequality and the closing of civil society space, has added to the pressure on multinationals to address these issues. Companies are feeling directly the effects of increased autocratization and the weakening of civic space surrounding their business operations. Corruption, lack of transparency and suppression of public debate lead to a less stable and profitable environment for business. The rise in internet shutdowns around the world prevents business from operating effectively while suppressing civil society at the same time. As a result, threats to civil society space are not just notional for companies – they are increasingly operational.
The boundaries between corporate responsibility and geopolitics are also blurring, with corporate responsibility increasingly politicized. Companies with supply chains in areas where civic freedoms are being suppressed are now at risk of breaching national sanctions regimes. Digital civic freedoms – online freedom of expression, association and assembly – are increasingly part of a larger geopolitical debate about the future of the internet (open and global versus sovereign and closed). Whereas global governance was hitherto primarily the domain of states, now non-state actors, particularly the private sector, are increasingly involved (as with the prominent role of Microsoft at UN debates on international cyberspace norms). This engagement is perhaps unsurprising, given the vast turnover of some of the world’s biggest companies, which are larger than the GDP of some states. Sixty-nine of the 100 richest entities in the world are businesses – and with this wealth comes power and leverage.
The boundaries between corporate responsibility and geopolitics are blurring, with corporate responsibility increasingly politicized.
The blurring boundaries of corporate responsibility – and the most dramatic, indeed historic example of such politicization – was exemplified by the unprecedented statements from business associations and company CEOs both immediately before and in the aftermath of the 2020 presidential election in the US. Those statements culminated in condemnation of the 6 January 2021 insurrection at the Capitol in Washington, and the subsequent severance by a number of companies of campaign contributions to Senate and House members who persisted in their refusal to accept the clear election result. The question remains whether this business support for the rule of law, accountable governance and electoral integrity can go further in 2021 and translate into broader support for civil society space at a time when it is fast deteriorating around the world.
Responsibilities and opportunities for business
In recent years, international standards have developed that elucidate the responsibility of companies to respect human rights – including the civic freedoms on which civil society is predicated – in their business operations. These standards are reflected in a number of international instruments, most prominently the UN Guiding Principles on Business and Human Rights 2011 (the ‘UN Guiding Principles’), as well as the ILO Declaration on Fundamental Rights and Principles at Work 1998 (the ‘core labour standards’) and the updated OECD Guidelines on Multinational Enterprises (2011). UN Sustainable Development Goal 16 also offers business an opportunity to support peace, justice and strong institutions, which are all fundamental both to human rights and civic space. The UN Guiding Principles establish the corporate responsibility to respect human rights, including the normative responsibility to actively seek to avoid causing or contributing to human rights harm through their business practices and address adverse human rights impacts with which they are involved.
Yet in situations where companies are not directly causing or contributing to harm itself, but are nevertheless operating in an environment in which civil society space is being curtailed by the host government, they also have the discretionary opportunity to be proactive in order to support and uphold civic freedoms. Indeed, there is a strong business case for companies taking action. Strong trade unions and civil society organizations help companies to secure the social licence to operate locally. They also play an important role in alerting companies to risks that may disrupt their business operations and damage their brand. Limits on civic freedoms may also produce negative economic outcomes. Beyond the normative responsibility and the business case, companies also have a moral choice to act: not only ‘to do no harm’ anywhere, but also to do good where possible.
As the UN Guiding Principles approach their 10-year anniversary, the framework for businesses to respect human rights and civic freedoms is becoming increasingly entrenched, including through the growth of mandatory human rights due diligence laws as well as corporate human rights policies and human rights impact assessments. But while this overall framework sets standards and expectations for companies, it does not tell companies how to address specific issues and situations. The reality is that corporate activism in this area – especially when it concerns concrete action that goes beyond public statements – is often complex and difficult.
Companies may face dilemmas about how to balance the expectations of diverse and sometimes conflicting sets of stakeholders. These include local communities and rights holders (including human rights defenders) – often supported by national and international human rights NGOs – whose civic freedoms or human rights may be threatened. Companies will also be mindful of the increasingly numerous and powerful responsible investors who consider environmental, social and governance (ESG) issues as material to profitable and sustainable investment. Employee activists are becoming more assertive and effective in demanding that companies take stands on social, environmental and political issues in ways that may challenge management, define brand values and win or lose customers.
At the same time, companies also must consider the reactions of the home and host governments of countries where they are legally incorporated or listed on stock exchanges, maintain direct operations and/or suppliers, benefit from significant commercial contracts, and abide by regulatory frameworks. Relations with governments will be a particular concern and challenge for companies, as taking a stand on civic space-related issues or situations may directly or indirectly criticize or counter government policies and actions. In authoritarian regimes, it may bring companies into conflict with the government in question. For example, over the last year, many global apparel brands have taken steps to identify and sever relationships with suppliers using Uighur forced labour in Xinjiang and elsewhere in China, but not all have publicly disclosed these steps. Among major brands, only Marks & Spencer has thus far publicly committed to the full range of steps set forth in the Call to Action issued by the End Uyghur Forced Labour campaign. This hesitation reflects the weight that access to China’s market carries with companies and therefore the need to speak and act with significant caution.
While companies are understandably averse to taking critical public stands that may risk damage to relationships with host country governments with commercial and legal consequences, the risks of inaction deserve equal attention. In many cases, companies may conclude that the risks – and the likely costs – of inaction may be more difficult to anticipate, mitigate and manage than the risks of action. These risks include lasting damage to corporate reputation and the social licence to operate. Royal Dutch Shell’s failure to intercede quickly or forcefully enough to avert the Nigerian government’s executions in 1995 of Ken Saro-Wiwa and his fellow Ogoni Nine activists protesting against both the company and the government remains the most vivid example of a major company not fully assessing the risks of action versus inaction. In that case, the company’s failure to take responsibility and action damaged its reputation globally and lost Shell its social licence (and physical ability) to operate in the Ogoniland region of the Niger Delta ever since. These dilemmas remain difficult in situations where a company has a normative responsibility to act but has not realized or accepted that to be the case; they are especially challenging when there is a discretionary opportunity to act without a clear-cut responsibility to do so.
While companies are understandably averse to taking critical public stands that may risk damage to relationships with host country governments with commercial and legal consequences, the risks of inaction deserve equal attention.
In practice, companies will need to be pragmatic about how and when to act or speak up in response to a specific civic space issue or situation. Companies sometimes assume that statements or actions must be direct and public. Many are beginning to move beyond such assumptions and instead are recognizing that a spectrum of statements and actions may be undertaken privately or publicly, individually or collectively, directly or indirectly as the issue evolves. Those determinations will need to be based on an assessment of the severity and urgency of the issue or situation, as well as the leverage that the company can exert and the most positive impact it can have through different forms of engagement or intervention. They also need to take into account possible risks to affected rights holders and communities, informed by direct consultations that are enabled by long-term relationships with them.
A recent example demonstrates the spectrum of actions that companies may take when it comes to supporting civil society space. In the wake of a shooting of striking garment workers in 2014 and increasing repression since, global apparel brands (including adidas and Nike) first privately and then publicly pressed the Cambodian government to respect freedom of association in 2018–19. They also urged the government to drop politically motivated criminal charges against the prominent labour rights activist Tola Moeun. The brands’ work was coordinated and amplified by two multi-stakeholder initiatives focused on labour rights largely in that sector, the Fair Labor Association (FLA) and the Ethical Trading Initiative (ETI), which made it clear to the Cambodian government that their sourcing decisions would be influenced by progress on the issue. In another significant step, the FLA, ETI and brands supported the EU’s review of trade preferences for Cambodian garment exports in light of the suppression of labour rights, which resulted in the loss of duty-free access in August 2020. Their engagement and advocacy demonstrate leverage and impact: brands working together with other stakeholders, supported by many of their home country governments represented by the EU, with trade preferences removed as a prod to reform. While it remains to be seen whether the Cambodian government eases its repression of freedom of association and worker rights – and whether major apparel brands will shift sourcing to other countries – a stand has been taken that may yet produce positive results.
With civic space under pressure around the world, business has a responsibility and an opportunity to uphold and defend the civic freedoms upon which an open and healthy civil society, as well as sustainable and profitable business environments, are based. But greater understanding is needed of the roles that companies can play individually or collectively and in conjunction with civil society organizations, industry bodies and multi-stakeholder initiatives. Further analysis is especially needed of the dilemmas they face as they balance stakeholder expectations and the reactions of governments that they may be compelled to challenge. The insights in this Chatham House synthesis paper help to narrow these gaps.